"The sales were not triggered by the information," Justice Porter said.

Mr Curry said that did not explain the leniency of the sentence.

"Whilst one doesn't deny that he did have health problems, we don't believe that excuses him," he said.

"It's three-and-a-half years now since that decision and Mr Gay's health still seems to be under control.

"We think the judge accepted that claim lightly."

ASIC commissioner Cathie Armour said Gay was the most senior Australian executive to have been convicted of insider trading.

"The conviction of Mr Gay sends a message to directors to carefully consider the information they possess when making a trading decision," Ms Armour said in a statement.

But Mr Curry rejected that.

"I think there was a clear opportunity for the judge to send a message to the business community in a position where a chairman ... took this action and clearly profited at the expense of shareholders generally," he said.

" ... This case certainly doesn't send a strong message.

Justice Porter said Gay had been advised by company secretary Wayne Chapman that he was in a permitted trading window and the chairman had been reassured by this.

But the judge told Gay, who changed his plead to guilty earlier this month: "You ought to have exercised far greater care."

He described Gay as a person of "exemplary character ... with a reputation of honesty and integrity."

The former sawmiller who joined Gunns in 1973 built the company into a top 100 Australian company by 2005, employing 2000 people.

When Gunns collapsed last year, Gay still held 12 million shares which were "effectively valueless", the judge said.

Gay did not comment outside the court but released a statement asking for privacy as he continues his treatment for cancer, the ABC reported.